Should California’s oil industry be regulated by financially self-serving bureaucrats? No! Should California’s oil industry be shut down? No!
The temptation to link the two questions is just plain wrong-headed. California needs an economically strong, productive oil industry. It also needs ethical professionals to regulate it.
Last week, environmental watchdogs and news media outlets reported that DOGGR’s top staff had financial ties to the very oil companies they regulated. They owned thousands of dollars of oil company stocks. One senior supervising oil and gas engineer even had a side business advising oil companies.
The investment ties were listed on the annual financial disclosure forms the regulators are required by law to file with the state Fair Political Practices Commission.
Consumer Watchdog and FracTracker Alliance quickly called for the firing of the regulators and a moratorium on the permits they were issuing. These included permits to allow fracking, a controversial process using high-pressure, underground injections to produce oil.
Instead, Gov. Gavin Newsom ordered his Secretary of Natural Resources to fire Ken Harris, the state’s top oil regulator. Newsom also called for alleged financial conflicts to be investigated and for tougher ethics rules to be imposed.
“Our industry produces energy under the toughest environmental, health and safety standards in the world,” said Western States Petroleum Association President Catherine Reheis-Boyd in response to Newsom’s actions. “As important as oil and gas production is to our state’s energy future and the communities in which we operate, all involved should be held to the highest standards of conduct.”
Newsom said he was angered by the financial conflict reports, as well as by learning that in just the first few months of his administration, the number of fracking permits skyrocketed in California.
“I am very angry about the fact that they signed off on this many permits,” Newsom told reporters, adding that it was likely oil companies increased their permit requests because he would be taking steps to curtail the practice in California. “They knew what was coming.”
Industry representatives countered that the permit spike resulted from a backlog of requests being resolved, and the need for oil operators to rework, plug or re-plug existing wells.
Long a critic of fracking, Newsom is viewed as much less supportive of California’s oil industry than his predecessor, former Gov. Jerry Brown, who appointed Harris and signed off on placing oil-friendly regulators on DOGGR’s staff. Brown also rebuffed efforts to curb fracking.
“The governor has long-held concerns about fracking and its impacts on Californians and our environment, and knows that ultimately California and our global partners will need to transition away from oil and gas extraction,” said Ann O’Leary, Newsom’s chief of staff, in an email explaining Harris’ firing. Newsom has budgeted money for studies on how to phase out fossil fuel use in California and how to accelerate electric vehicle use.
O’Leary added that Newsom will be placing new leadership in DOGGR “that share this point of view and can run the division accordingly.”
But even Newsom acknowledges ending oil production and use in California is easier said than done.
According to the Western States Petroleum Association, there are 368,000 jobs in California connected to oil and gas operations, which generate $24.6 billion in tax revenues.
And California has a nearly insatiable demand for oil. State officials report that despite efforts to increase the use of electric vehicles, gasoline sold in California increased from 942,000 barrels per day in 2012 to more than 1,012,000 BPD last year. Diesel sales also increased during that same period.
The oil industry is critically needed to fuel the state’s economy and provide much-needed jobs for its citizens.
The industry deserves and needs to be regulated by competent, ethical and fair professionals. Californians deserve to be protected by regulators who are focused on protecting California’s resources and environment, rather than enriching themselves.
Gov. Newsom was right to fire DOGGR’s top regulator, who seemed to turn a blind eye to perceived, or real financial conflicts involving his staff. Conflict allegations should be vigorously investigated, wrongdoing punished and high ethical standards enforced.
But the governor must not target an important, productive industry just to appease powerful activists chasing unrealistic, or at least premature, goals.